149 uthungulu District 2014/2015 9. Intangible Assets 2015 2014 Accumulated amortisation and accumulated impairment Accumulated amortisation and accumulated impairment Cost Carrying value Cost Carrying value Computer software and other 2 169 958 (1 120 212) 1 049 746 3 221 030 (2 289 055) 931 975 Total 2 169 958 (1 120 212) 1 049 746 3 221 030 (2 289 055) 931 975 2015 2014 Accumulated amortisation and accumulated impairment Accumulated amortisation and accumulated impairment Cost Carrying value Cost Carrying value Computer software and other 2 169 958 (1 120 212) 1 049 746 3 221 030 (2 289 055) 931 975 Total 2 169 958 (1 120 212) 1 049 746 3 221 030 (2 289 055) 931 975 Reconciliation of intangible assets - 2015 Opening carrying value Additions Disposals Amortisation Total Computer software and other 931 975 626 793 (259 570) (249 452) 1 049 746 Reconciliation of intangible assets - 2015 Opening carrying value Additions Disposals Amortisation Total Computer software and other 931 975 626 793 (259 570) (249 452) 1 049 746 Reconciliation of intangible assets - 2014 Opening carrying value Additions Amortisation Total Computer software and other 1 077 033 378 968 (524 026) 931 975 Reconciliation of intangible assets - 2014 Opening carrying value Additions Amortisation Total Computer software and other 1 077 033 378 968 (524 026) 931 975 38
uthungulu District 2014/2015 10. Investments in municipal entities % Holding uthungulu Financing Partnership 99 99 uthungulu House Development Trust 100 100 Carrying amount uthungulu Financing Partnership 15 750 106 18 160 171 uthungulu House Development Trust 4 016 824 4 844 303 19 766 930 23 004 474 The carrying amounts of municipal entities are shown net of impairment losses. 11. Long-term liabilities At amortised cost ABSA Bank 12.6% 36 442 488 38 537 512 36 442 488 38 537 512 The loan was raised originally for the development of the uthungulu House building and the greater Mthonjaneni Bulk Water Scheme. Subsequently infrastructure for the landfill site and sewer treatment plants were constructed there from. The original loan is repayable after a 15 year period (remaining period 9 years). Interest at 12.6% is payable 6 monthly in arrears on the last day of the month. INCA 11.95% 22 070 918 23 652 428 22 070 918 23 652 428 The loan was raised to finance extensions to uthungulu House and the development of the Regional Solid Waste site cell 2. The original loan is repayable after a 15 year period (remaining period 8 years). Interest at 11.95% is payable 6 monthly in arrears on the last day of the month. Obligation under Finance Head lease 19 071 474 22 332 937 The finance head lease payments represent payments by the municipality for a head lease property in which the municipality has a controlling interest at the end of the lease through uthungulu Financing Partnership and consists of a lease over Portion 2 of ERF 10033 Richards Bay, 2 Haiti, Central Business District, known as uthungulu House. The original lease period expires on 31 October 2017, ownership of the property will vest with uthungulu on the termination of the lease. The yield to maturity on the lease is 23.81% and is paid 6 monthly in advance on the last day of the month. Long - term liabilities 58 513 406 62 189 940 77 584 880 84 522 877 Refer to Appendix A for more information. Non-current liabilities At amortised cost 54 389 079 58 513 405 68 056 141 77 584 878 Current liabilities At amortised cost 4 124 327 3 676 535 9 528 739 6 937 999 58 513 406 62 189 940 77 584 880 84 522 877 The comparative figures for non-current liabilities and current liabilities has been re-stated by an amount of R 5 097 987 and (R 5 097 987) respectively. The changes is to account for the current portion of the long term lease. Refer to note 39. Finance lease Obligations under finance lease - within one year 9 529 774 8 359 452 - in second to fifth year inclusive 16 651 276 26 181 049 less future finance charges (7 109 577) (12 207 563) 19 071 473 22 332 938 The original lease period expires on 31 October 2017,ownership of the property will vest with Uthungulu on termination of the lease. Present value of minimum of lease payments receivable - within one year 8 281 850 7 267 144 - in second to fifth year inclusive 10 789 623 15 065 794 19 071 473 22 332 938 39 150
uthungulu District 2014/2015 12. Payables from exchange transactions Accrued leave pay 8 083 646 7 842 236 8 083 646 7 842 236 Amounts received in advance 2 844 874 2 497 187 2 844 874 2 497 187 Employee payable transactions 745 078 57 432 745 078 57 432 Retention payables 31 543 694 25 751 269 31 543 694 25 751 269 Trade payables 143 471 114 128 157 248 143 471 114 128 157 248 186 688 406 164 305 372 186 688 406 164 305 372 The comparative figure for payables from exchange transactions - trade payables has been re-stated by an amount of R 735 594. Refer to note 39. Payables are settled in terms of legislation, except for retentions which are settled in terms of the contract agreement. Payments received in advance are non interest bearing. 13. Consumer deposits Water 9 698 427 9 661 373 9 698 427 9 661 373 In terms of Council's by-laws no interest is raised or paid on consumer deposits. 14. Defined benefit obligations Defined benefit plan Post retirement health care benefit liability The municipality provides certain post retirement medical benefits by funding the medical aid contributions of certain retired members of the municipality. According to the rules of the medical aid funds, with which the municipality is associated, a member (who is on the current condition of service), on retirement, is entitled to remain a continued member of such medical aid fund, in which case the municipality is liable for a certain portion of the medical aid membership fee. The most recent actuarial valuations of planned assets and the present value of the unfunded defined benefit obligation were carried out as at 30 June 2015 by ZAQ Consultants and Actuaries, a member of the Actuarial Society of South Africa. The present value of the defined benefit obligation, and the related current service cost and past service cost, were measured using the projected unit credit method. No other post retirement benefits are provided by the municipality. The municipality makes monthly contributions to the following medical aid schemes: - Bonitas - Key Health - Hosmed - Samwumed - LA Health The post employment health care benefit plan is a defined benefit plan, of which the members are made up as follows: Membership In-service members (Employees) 235 214 235 214 Continuation members (Retirees, widowers and orphans) 4 4 4 4 239 218 239 218 Estimated liability in respect of past services In-service members (Employees) 18 242 000 14 058 000 18 242 000 14 058 000 Continuation members (Retirees, widowers and orphans) 1 936 000 1 795 000 1 936 000 1 795 000 20 178 000 15 853 000 20 178 000 15 853 000 40 151
uthungulu District 2014/2015 14. Defined benefit obligations (continued) Long service awards A long-service award is granted to municipal employees after the completion of fixed periods of continuous service with the municipality which includes their uninterrupted service with the former local authorities amalgamated in December 2000. The said award comprises a certain number of vacation leave days which, in accordance with the option exercised by the beneficiary employee, can be converted into an amount based on his or her basic salary applicable at the time the award became due or, alternatively, credited to his or her vacation leave accrual. The provision represents an estimation of the awards to which employees in the service of the municipality at 30 June 2015 may become entitled to in future, based on actuarial valuation performed at that date. The most recent actuarial valuations of planned assets and the present value of the unfunded defined benefit obligation were carried out as at 30 June 2015 by ZAQ Consultants and Actuaries, a member of the Actuarial Society of South Africa. The present value of the defined benefit obligation, and the related current service cost and past service cost, were measured using the projected unit credit method. No other long service benefits are provided by the municipality. The amounts recognised in the statement of financial position are as follows: Carrying value Present value of fund obligations -post employment medical aid benefits 20 178 000 15 853 000 20 178 000 15 853 000 Present value of fund obligations -long service awards 3 919 000 4 015 000 3 919 000 4 015 000 24 097 000 19 868 000 24 097 000 19 868 000 Non current liabilities 23 761 000 19 322 000 23 761 000 19 322 000 Current liabilities 336 000 546 000 336 000 546 000 24 097 000 19 868 000 24 097 000 19 868 000 Changes in the present value of the defined benefit obligation are as follows: Opening balance 19 868 000 18 464 000 19 868 000 18 464 000 Net expense recognised in the statement of financial performance-total included in employee related costs 4 229 000 1 404 000 4 229 000 1 404 000 24 097 000 19 868 000 24 097 000 19 868 000 Net expense recognised in the statement of financial performance Post employment medical aid benefits - current service cost 1 668 000 1 564 000 1 668 000 1 564 000 Long service awards - current service cost 646 000 332 000 646 000 332 000 Post employment medical aid benefits - interest cost 1 484 000 1 294 000 1 484 000 1 294 000 Long service awards - interest cost 338 000 206 000 338 000 206 000 Post employment medical aid benefits - actuarial loss/(gain) 1 290 277 (2 581 707) 1 290 277 (2 581 707) Long service awards - actuarial loss/(gain) (706 370) 908 146 (706 370) 908 146 Post employment medical aid benefits - benefits paid (117 277) (89 293) (117 277) (89 293) Long service awards - benefits paid (373 630) (229 146) (373 630) (229 146) 4 229 000 1 404 000 4 229 000 1 404 000 Calculation of actuarial gains and losses Post employment medical aid benefits - actuarial loss/(gain) 1 290 277 (2 581 707) 1 290 277 (2 581 707) Long service awards - actuarial loss/(gain) (706 370) 908 146 (706 370) 908 146 583 907 (1 673 561) 583 907 (1 673 561) Expected future service and interest costs Post employment medical aid benefits The future service cost for the ensuing year is established to be R 1 437 000, whereas the interest cost for the next year is estimated to be R 1 905 000 (2014 - R 1 668 000 and R 1 484 000 respectively). The municipality expects to make a contribution of R 191 000,(2014 - R176 000) to the defined benefit plans during the next financial year. Long service awards The future service cost for the ensuing year is established to be R 548 000, whereas the interest cost for the next year is estimated to be R 370 000 (2014 - R 646 000 and R 338 000 respectively). The municipality expects to make a contribution of R 145 000,(2014 - R370 000) to the defined benefit plans during the next financial year. 41 152
uthungulu District 2014/2015 14. Defined benefit obligations (continued) Key assumptions used Assumptions used at the reporting date: Post employment medical aid benefits Discount rate 8 Yield curve 8,94 % Yield curve 8,94 % Medical aid contribution inflation, 8 CPI +1% 8,05 % CPI +1% 8,05 % Net effective discount rate, 0 Yield curve Yield curve, based 8 0,82% based 0,82% Consumer price inflation (CPI) 7, 0 Long service awards Difference between 5 nominal and % yield curves 7,05% Difference between nominal and yield curves 7,05% Discount rate 7 Yield curve 7,96% Yield curve 7,96% Normal salary increase rate, 7Equal to CPI + Equal to CPI +, 1% 7,33% 1% 7,33% 3 Net effective discount rate 0 Yield curve 0,59% Yield curve 0,59% Consumer price inflation (CPI), 6, Difference between Difference between 3 nominal and 3 yield curves 6,33% nominal and yield curves 6,33% % The expected retirement age for females is 58 years and males 63 years (2014 - females 58 years males 63 years). The basis on which the discount rate and medical aid inflation rate has been determined is as follows for post employment medical aid benefits: The discount rate that reflects the time value of money is best approximated by reference to market yields at the reporting date on government bonds. Where there is no deep market in government bonds with a sufficiently long maturity to match the estimated maturity of all the benefit payments, an entity uses current market rates of the appropriate term to discount shorter term payments, and estimates the discount rate for longer maturities by extrapolating current market rates along the yield curve. The discount rate and CPI assumptions were based on the nominal and real zero curves as at 30 June 2015 by the JSE. In the previous reporting period the discount rate was set as the yield of the R209 South African valuation date. The actual yield on the R209 bond was sourced from the RMB Global government bond as at the Markets website on the 30th of June 2014. The methodology applied by the actuaries for the 2014/2015 financial year has been adopted to present a more accurate depiction of the liability. The medical aid contribution inflation rate was set with reference to the past relationship between the (yield curve based ) discount rate for each relevant time period and the (yield curve based)medical aid contribution inflation for each relevant time period. In the previous reporting period the medical aid inflation rate was set with reference to the past relationship between CPI and medical aid contribution rate Inflation. The actuaries have derived the underlying future rate of consumer price index inflation (CPI inflation) from the relationship between current conventional government bond yields (R209) and current index-linked bond yields (R202). South Africa has experienced high health care cost inflation in recent years. The annualised compound rates of increase for the last ten years show that registered medical aid schemes contribution inflation outstripped general CPI by almost 3% year on year. We do not consider these increases to be sustainable and have assumed that medical aid contribution increases would out-strip general inflation by 1% per annum over the foreseeable future. 42 153
uthungulu District 2014/2015 14. Defined benefit obligations (continued) The basis on which the discount rate and salary inflation has been determined is as follows for long service awards: The discount rate that reflects the time value of money is best approximated by reference to market yields at the reporting date on government bonds. Where there is no deep market in government bonds with a sufficiently long maturity to match the estimated maturity of all the benefit payments, an entity uses current market rates of the appropriate term to discount shorter term payments, and estimates the discount rate for longer maturities by extrapolating current market rates along the yield curve. The discount rate and CPI assumptions were based on the nominal and real zero curves as at 30 June 2015 by the JSE. In the previous reporting period the discount rate used by the actuaries was therefore set as the yield of the R208 South African government bond as at the valuation date. The actual yield on the R208 bond was sourced from the RMB Global Markets website on the 30th of June 2014. The actuaries have derived the underlying future rate of consumer index inflation (CPI inflation) from the relationship between (yield curve based) Conventional Bond Rate for each relevant time period and the (yield curve based) inflation linked bond rate for each relevant time period. Our assumed rate of salary inflation was set as the assumed value of CPI plus 1%. The salaries used in the valuation include an assumed increase on 01 July 2015 of 6.79%. The next salary increase was assumed to take place on 01 July 2016. In the previous reporting period the actuaries have derived the underlying future rate of consumer price index inflation (CPI inflation) from the relationship between current conventional bond yields (R208) and current index-linked bond yields (R197). The actual yield on the R208 and R197 government bonds was sourced from the RMB Global Markets website. Other assumptions Assumed healthcare cost trends and salary inflation rates have a significant effect on the amounts recognised in surplus or deficit. A one percentage point change in assumed healthcare cost trends and salary inflation rates would have the following effects: 43 154
uthungulu District 2014/2015 14. Defined benefit obligations (continued) Increase of 1 % / (Decrease of 1 %) Effect on the post employment medical aid benefit (pemab) 854 000 705 000 854 000 705 000 Effect on the aggregate of the service cost and interest cost - pemab 140 000 147 000 140 000 147 000 Effect on the post employment medical aid benefit (pemab) (1 161 000) (983 000) (1 161 000) (983 000) Effect on the aggregate of the service cost and interest cost - pemab (191 000) (208 000) (191 000) (208 000) Effect on the Long Service awards (lsa) 316 000 347 000 316 000 347 000 Effect on the aggregate of the service cost and interest cost - lsa 87 000 102 000 87 000 102 000 Effect on the long service awards (lsa) (173 000) (308 000) (173 000) (308 000) Effect on the aggregate of the service cost and interest cost - lsa (23 000) (91 000) (23 000) (91 000) Defined benefits obligations An amount of R14 043 954 (2014 - R11 755 553) was contributed by Council towards employment retirement funding. These contributions have been expensed. The Zululand Joint Provident Fund has received a notice of exemption for further valuations per notice number 12/8/37666. Description of Fund Last Actuarial Total Assets Total Liabilities Net Valuation R'000 R'000 Gain/(Loss) Government Employees Pension Fund March 2012 1 038 946 1 038 946 - KwaZulu-Natal Joint Municipal Provident Fund March 2014 2 151 950 2 054 982 96 968 Natal Joint Municipal Pension Fund (Superannuation Fund) March 2014 8 510 836 8 510 836 - Natal Joint Municipal Pension Fund (Retirement) March 2014 3 120 110 3 244 137 (124 027) Zululand Joint Provident Fund (Uthungulu District February 2009 12 541 836 12 541 836 - Provident Fund) 44 155
156 uthungulu District 2014/2015 15. Provisions Reconciliation of provision - 2015 Opening Balance Additions Utilised during the year Transfer of current portion Reversal of short term portion Total Rehabilitation of refuse landfill site 60 853 204 2 189 760 (3 305 980) - 3 279 412 63 016 396 Performance bonus 735 594 1 048 172 (735 594) - - 1 048 172 Current portion of reclamation of refuse landfill site 3 279 412 (3 279 412) - 64 868 210 3 237 932 (4 041 574) - - 64 064 568 Reconciliation of provision - 2014 Opening Balance Additions Utilised during the year Transfer of current portion Reversal of short term portion Total Rehabilitation of refuse landfill site 57 605 107 4 805 497 (13 907 859) (3 279 412) 15 629 871 60 853 204 Performance bonus 860 923 741 166 (866 495) - - 735 594 Current portion of reclamation of refuse landfill site 15 629 871 - - 3 279 412 (15 629 871) 3 279 412 74 095 901 5 546 663 (14 774 354) - - 64 868 210 Reconciliation of provision - 2015 Opening Balance Additions Utilised during the year Transfer of current portion Reversal of short term portion Total Rehabilitation of refuse landfill site 60 853 204 2 189 760 (3 305 980) - 3 279 412 63 016 396 Performance bonus 735 594 1 048 172 (735 594) - - 1 048 172 Current portion of reclamation of refuse landfill site 3 279 412 (3 279 412) - Total 64 868 210 3 237 932 (4 041 574) - - 64 064 568 Reconciliation of provision - 2014 Opening Balance Additions Utilised during the year Transfer of current portion Reversal of short term portion Total Rehabilitation of refuse landfill site 57 605 107 4 805 497 (13 907 859) (3 279 412) 15 629 871 60 853 204 Performance bonus 860 923 741 166 (866 495) - - 735 594 Current portion of reclamation of refuse landfill site 15 629 871 - - 3 279 412 (15 629 871) 3 279 412 Total 74 095 901 5 546 663 (14 774 354) - - 64 868 210 45
uthungulu District 2014/2015 15. Provisions (continued) Non-current liabilities 63 016 396 60 853 204 63 016 396 60 853 204 Current liabilities 1 048 172 4 015 006 1 048 172 4 015 006 64 064 568 64 868 210 64 064 568 64 868 210 Performance bonuses are paid after the financial year end in arrears as the assessment of eligible employees had not taken place at reporting date. In terms of licensing of the landfill refuse site, Council will incur rehabilitation costs of R 63 million to restore the remaining portions of the old Empangeni and Cell 1 refuse sites at the end of their useful lives. Planning and rehabilitation had commenced in 2013 with the planned rehabilitation portion completed in 2014/2015. Provision has been made at best estimate determined by professional engineer at a cost for the current solid waste (Cell 1 & Cell 2) and the old Empangeni Site. 16. Revenue from exchange transactions - Service charges Sale of water 35 133 653 37 658 953 35 133 653 37 658 953 Solid waste revenue 13 523 837 11 380 914 13 523 837 11 380 914 Sanitation revenue 4 898 097 4 529 472 4 898 097 4 529 472 Cemetery revenue 270 487 231 686 270 487 231 686 53 826 074 53 801 025 53 826 074 53 801 025 17. Revenue from exchange transactions - Interest received Interest revenue Outstanding debtors 28 691 28 237 28 691 28 237 External investments 37 098 903 32 912 911 37 045 797 32 865 705 37 127 594 32 941 148 37 074 488 32 893 942 18. Revenue from non exchange transactions - Government grants and subsidies Levy Replacement Grant 197 121 000 180 845 000 197 121 000 180 845 000 Equitable share 185 008 000 173 064 000 185 008 000 173 064 000 Municipal Infrastructure Grant 152 276 250 178 514 303 152 276 250 178 514 303 Department of Co-operative Governance and Traditional Affairs (Previously DTLGA) 5 984 028 3 479 557 5 984 028 3 479 557 Department of Water and Sanitation 126 613 813 70 353 268 126 613 813 70 353 268 Department of Co-operative Governance and Traditional Affairs 18 954 076 14 902 806 18 954 076 14 902 806 Department of Public Works 5 337 000 7 860 064 5 337 000 7 860 064 National Treasury 5 387 500 1 112 500 5 387 500 1 112 500 Public donors 70 841 174 142 70 841 174 142 Provincial Treasury - 252 196-252 196 Department of Sports and Recreation - 273 800-273 800 Department of Transport 1 696 343 2 167 278 1 696 343 2 167 278 Department of Economic Affairs & Tourism - 11 841-11 841 Department of Agriculture 139 297 38 410 139 297 38 410 European Union 245 382-245 382-698 833 530 633 049 165 698 833 530 633 049 165 Summary of grants per funder Levy Replacement Grant Regional council levies have been discontinued as from 30 June 2006, and the national fiscus has allocated a levy replacement grant to the district municipalities. The levy replacement grant is an interim measure to ensure the financial stability of the district municipalities while National government is currently defining the overall fiscus streams to local government. 46 157
uthungulu District 2014/2015 18. Government grants and subsidies (continued) Equitable share In terms of the Constitution, this grant is unconditional and is used to subsidise the provision of basic services to the community. These subsidies includes 6 kilolitre free basic water to the entire district with the exception of KZ 282. Municipal Infrastructure Grant Balance unspent at beginning of year 6 557 180-6 557 180 - Current-year receipts 144 063 000 185 343 000 144 063 000 185 343 000 Conditions met - transferred to revenue (152 276 250) (178 514 303) (152 276 250) (178 514 303) MIG debtor receipt - (271 517) - (271 517) MIG debtor raised 1 656 070-1 656 070 - - 6 557 180-6 557 180 This grant is used to construct water and sewerage infrastructure as part of the upgrading of informal settlement areas. Department of Co-operative Governance and Traditional Affairs (Previously DTLGA) Balance unspent at beginning of year 5 600 770 9 080 327 5 600 770 9 080 327 Current year receipts 1 000 000-1 000 000 - Conditions met - transferred to revenue (5 984 029) (3 479 557) (5 984 029) (3 479 557) 616 741 5 600 770 616 741 5 600 770 These grants are used: - to build capacity within the district in order to perform functions as per legislature; - for disaster programmes, fire fighting equipment, water service delivery planning, shared services unit and infrastructure. Department of Water Affairs Balance unspent at beginning of year 11 360 251 917 526 11 360 251 917 526 Current-year receipts: RBIG 73 055 670 32 164 041 73 055 670 32 164 041 Conditions met - transferred to revenue: RBIG (107 098 341) (32 163 855) (107 098 341) (32 163 855) Current-year receipts: ACIP 958 356 2 531 152 958 356 2 531 152 Conditions met - transferred to revenue: ACIP (958 356) (3 049 828) (958 356) (3 049 828) Current-year receipts: MWIG (tanker reduction strategy) 37 412 000 39 478 000 37 412 000 39 478 000 Conditions met - transferred to revenue: MWIG (tanker reduction strategy) (17 728 524) (28 343 799) (17 728 524) (28 343 799) Current-year receipts: WSOG Boreholes - 1 500 000-1 500 000 Conditions met - transferred to revenue: WSOG boreholes - (1 442 809) - (1 442 809) Current-year receipts: WSOG Boreholes - 1 624 000-1 624 000 Conditions met - transferred to revenue : WSOG - (1 624 000) - (1 624 000) DWA debtor receipt (2 368 365) (218 025) (2 368 365) (218 025) Conditions met-transferred to revenue : Other (828 590) (12 152) (828 590) (12 152) Debtor - RBIG 38 211 291-38 211 291 - Conditions met-transferred to revenue (1 130 357) - (1 130 357) - 30 885 035 11 360 251 30 885 035 11 360 251 These grants are used for: - water infrastructure and sanitation projects; - drought relief and disaster relief programmes 47 158
uthungulu District 2014/2015 18. Government grants and subsidies (continued) Department of Co-operative Governance and Traditional Affairs Balance unspent at beginning of year 22 456 499 14 691 305 22 456 499 14 691 305 Current-year receipts: MSIG 934 000 890 000 934 000 890 000 Conditions met - transferred to revenue: MSIG (DCOGTA) (934 000) (1 712 439) (934 000) (1 712 439) Conditions met - transferred to revenue: Councillor training programme (6 563) (193 430) (6 563) (193 430) Conditions met - transferred to revenue: Growth and development summit (126 956) (251 374) (126 956) (251 374) Conditions met - transferred to revenue: Water reduction strategy - (11 423 286) - (11 423 286) Current-year receipts: Public participation - 750 000-750 000 Conditions met - transferred to revenue: Public participation (750 000) - (750 000) Current-year receipts: Fresh produce market - 18 000 000-18 000 000 Conditions met - transferred to revenue: Fresh produce market (12 596 016) (140 328) (12 596 016) (140 328) Current-year receipts: Municipal excellency 1 000 000 1 000 000 1 000 000 1 000 000 Conditions met - transferred to revenue: Municipal excellency (2 000 000) - (2 000 000) - Current-year receipts: BIOGAS - 2 000 000-2 000 000 Conditions met - transferred to revenue: BIOGAS (1 472 722) (643 507) (1 472 722) (643 507) Conditions met - transferred to revenue: Massification - (1 107 009) - (1 107 009) Conditions met - transferred to revenue: Other (1 067 818) 596 567 (1 067 818) 596 567 5 436 424 22 456 499 5 436 424 22 456 499 The comparative figure for the balance unspent at the beginning of the year has been restated by an amount of R 32 361 and the comparative figure for conditions met transferred to revenue - revenue from non exchange transactions has been restated by an amount of R 568 567.Refer to note 19 and 39. The Department of Co-operative Governance and Traditional Affairs grants are used to build capacity within the district in order to perform functions as per legislature. Department of Public Works Grants Balance unspent at beginning of year 127 094 5 147 158 127 094 5 147 158 Current-year receipts:epwp 5 337 000 2 840 000 5 337 000 2 840 000 Conditions met - transferred to revenue (5 337 000) (7 860 064) (5 337 000) (7 860 064) Transferred to EQS and LRG (127 094) - (127 094) - - 127 094-127 094 This grant is used to construct water and sewerage infrastructure as part of the upgrading of informal settlement areas. The allocation from funder was reduced by an amount of R127 094 through a set off against the levy replacement and Equitable share tranche in the year under review. This pertained to the unspent allocation from previous financial years. National Treasury Balance unspent at beginning of year 4 137 500-4 137 500 - Current-year receipts-local Finance Management Grant 1 250 000 1 250 000 1 250 000 1 250 000 Conditions met transferred to revenue-local Finance Management grant (1 387 500) (1 112 500) (1 387 500) (1 112 500) Current-year receipts-rural Households Infrastructure grant - 4 000 000-4 000 000 Conditions met transferred to revenue-rural households infrastructure grant (4 000 000) - (4 000 000) - - 4 137 500-4 137 500 48 159
uthungulu District 2014/2015 18. Government grants and subsidies (continued) National treasury other grants are used for: - to promote and support reforms to municipal financial management; and - the implementation of the Municipal Finance Management Act (Act no. 56 of 2003). Public donors Balance unspent at beginning of year 88 044 180 186 88 044 180 186 Current-year receipts 20 000 82 000 20 000 82 000 Conditions met - transferred to revenue (70 841) (174 142) (70 841) (174 142) 37 203 88 044 37 203 88 044 The grant received for the 2014/2015 financial year was R20 000 from Nedbank and for the 2013/2014 financial year was R 82 000 from BHB Billiton. The allocations were received to partner with the district municipality in raising funds to support children in need of school uniforms. Provincial Treasury Balance unspent at beginning of year - 280 196-280 196 Conditions met - transferred to revenue - (252 196) - (252 196) Conditions met - transferred to revenue: Other - (28 000) - (28 000) - - - - The grant received from Provincial Treasury is used for the upliftment of the district's communities through various programmes. Department of Sport & Recreation Balance unspent at beginning of year 3 813 277 613 3 813 277 613 Conditions met - transferred to revenue - (273 800) - (273 800) 3 813 3 813 3 813 3 813 The grant received from the Department of Sport and Recreation is used to develop sporting codes within the district. The grant is spent in accordance with the approved business plan. Department of Transport Balance unspent at beginning of year 1 006 459 1 427 737 1 006 459 1 427 737 Current-year receipts: Rural transport services and infrastructure grant 2 305 000 1 746 000 2 305 000 1 746 000 Conditions met - transferred to revenue (1 696 343) (2 167 278) (1 696 343) (2 167 278) The Department of Transport grant is used for the development of the public transport plan. 1 615 116 1 006 459 1 615 116 1 006 459 49 160
uthungulu District 2014/2015 18. Government grants and subsidies (continued) Department of Economic Affairs and Tourism Balance unspent at beginning of year - 11 841-11 841 Conditions met - transferred to revenue - (11 841) - (11 841) - - - - The grant received from the Department of Economic Affairs and Tourism is for the development and promotion of the district's local economy and tourism. Department of Agriculture Balance unspent at beginning of year 139 298 177 708 139 298 177 708 Conditions met - transferred to revenue (139 298) (38 410) (139 298) (38 410) - 139 298-139 298 The grant received from the Department of Agriculture is for the development of district agricultural projects. European Union Balance unspent at beginning of year 245 385 245 385 245 385 245 385 Current year receipts 9 057-9 057 - Conditions met - transferred to revenue (245 382) - (245 382) - 9 060 245 385 9 060 245 385. The grant received from the European Union is for the development of critical sector plans. 19. Unspent conditional grants and receipts Unspent conditional grants and receipts comprises of: Conditional Grants from spheres of Government and other Municipal Infrastructure Grant - 6 557 180-6 557 180 Department of Co-operative Governance and Traditional Affairs(Previously DTLGA) 616 741 5 600 770 616 741 5 600 770 Department of Water and Sanitation 30 885 035 11 360 251 30 885 035 11 360 251 Department of Co-operative Governance and Traditional Affairs 5 436 424 22 456 499 5 436 424 22 456 499 Department of Public Works - 127 094-127 094 National Treasury - 4 137 500-4 137 500 Public donors 37 203 88 044 37 203 88 044 Department of Sport and Recreation 3 813 3 813 3 813 3 813 Department of Transport 1 615 116 1 006 459 1 615 116 1 006 459 Department of Agriculture - 139 298-139 298 European Union 9 050 245 376 9 050 245 376 The comparative figure for unspent conditional grants and receipts (Department of Co-operative Governance and Traditional Affairs) has been re-stated by an amount of R 536 206 (R568 567 - R32 361). Refer to note 18 and 39. 38 603 382 51 722 284 38 603 382 51 722 284 20. Revenue from exchange transactions - Other income Sundry income 8 887 931 8 514 787 8 887 931 8 514 787 Income from the uthungulu House Development Trust 2 232 521 2 538 570 Income from the uthungulu Financing Partnership 2 889 385 3 125 934 Tender deposits 722 004 529 616 722 004 529 616 SETA refund 99 093-99 093 - Insurance claim proceeds 130 742 345 656 130 742 345 656 Lease income 116 609 181 061 116 609 181 061 9 956 379 9 571 120 15 078 285 15 235 624 50 161
uthungulu District 2014/2015 21. Employee related costs Employee related costs - salaries and wages 90 358 752 76 560 804 90 358 752 76 560 804 Employee related costs - contributions for UIF, pensions and medical aid 20 151 028 16 947 119 20 151 028 16 947 119 Travel and other allowances 9 831 428 8 233 825 9 831 428 8 233 825 Overtime and relief payments 5 232 127 6 054 182 5 232 127 6 054 182 Housing benefits and allowances 2 407 341 2 359 372 2 407 341 2 359 372 Defined benefits obligations: post-employment health care benefit and long service awards 4 229 000 1 404 000 4 229 000 1 404 000 132 209 676 111 559 302 132 209 676 111 559 302 The comparative figure for employee related costs - salary and wages has been re-stated by an amount of R 735 594. Refer to note 39. Included in employee related costs above are the following salaries, allowances and benefits: Remuneration of Municipal Manager Annual Remuneration 1 119 627 1 080 463 1 119 627 1 080 463 Car Allowance 383 981 363 984 383 981 363 984 Performance Bonuses 197 353 186 887 197 353 186 887 Contributions to UIF and other 1 866 1 861 1 866 1 861 1 702 827 1 633 195 1 702 827 1 633 195 Remuneration of Deputy Municipal Manager - Technical Services Annual Remuneration 928 061 873 745 928 061 873 745 Car Allowance 241 520 222 389 241 520 222 389 Performance Bonuses 179 416 169 902 179 416 169 902 Contributions to UIF, pension and other 209 832 200 376 209 832 200 376 1 558 829 1 466 412 1 558 829 1 466 412 Remuneration of Deputy Municipal Manager - Corporate Services Annual Remuneration 977 152 922 712 977 152 922 712 Car Allowance 298 575 281 940 298 575 281 940 Performance Bonuses 179 416 169 902 179 416 169 902 Contributions to UIF and other 1 866 1 861 1 866 1 861 Annual bonus 81 429 76 893 81 429 76 893 1 538 438 1 453 308 1 538 438 1 453 308 Remuneration of Deputy Municipal Manager - Financial Services Annual Remuneration 950 009 897 082 950 009 897 082 Car Allowance 419 218 389 060 419 218 389 060 Performance Bonuses 179 416 169 902 179 416 169 902 Contributions to UIF and other 1 866 1 861 1 866 1 861 1 550 509 1 457 905 1 550 509 1 457 905 51 162
uthungulu District 2014/2015 21. Employee related costs (continued) Remuneration of Deputy Municipal Manager - Planning & Economic Development Annual Remuneration 694 348 300 329 694 348 300 329 Car Allowance 144 127 153 883 144 127 153 883 Performance Bonuses - 169 902-169 902 Contributions to UIF, pension,medical and other 31 830 781 31 830 781 Leave pay - 93 143-93 143 Annual bonus 7 411-7 411-877 716 718 038 877 716 718 038 The contract of the Deputy Municipal Manager - Planning and Economic Development ended on 31 October 2013 and an acting allowance was paid to an incumbent for the period December 2013 to April 2014. In the year under review the position was filled and the incumbent commenced with her appointment from the 1 November 2014. Remuneration of Deputy Municipal Manager - Community Services Annual Remuneration 747 000-747 000 - Car Allowance 136 340-136 340 - Contributions to UIF, Medical, Pension and other 133 870-133 870 - Acting allowance 8 251 28 707 8 251 28 707 1 025 461 28 707 1 025 461 28 707 In the 2013/2014 financial year the Council approved the creation of a Deputy Municipal Manger - Community Services position; this function was previously under the custodianship of the Deputy Municipal Manager- Corporate Services. During the financial year under review an acting allowance amounting to R8 251 was paid to an incumbent. The post was filled from the 1 October 2014. 52 163
uthungulu District 2014/2015 53 164
uthungulu District 2014/2015 22. Remuneration of councillors Mayor 809 232 764 609 809 232 764 609 Deputy Mayor 651 560 615 861 651 560 615 861 Speaker 436 926 489 375 436 926 489 375 Chief Whip 425 272 385 798 425 272 385 798 Executive Committee 3 108 875 2 666 905 3 108 875 2 666 905 Councillors 2 817 426 3 167 055 2 817 426 3 167 055 Councillors' pension contribution 720 726 724 190 720 726 724 190 MPAC Chair 425 459-425 459-9 395 476 8 813 793 9 395 476 8 813 793 In-kind benefits The Mayor, Deputy Mayor, Speaker, Chief Whip and Executive Committee Members are full-time. Each is provided with an office and secretarial support at the cost of the Council which is included with other expenditure in the statement of financial performance. The Mayor, Deputy Mayor and Speaker have the use of a Council owned vehicle together with a driver for official duties and furthermore security is provided for some Exco members based on security assessments. The MPAC Chair was previously a part time councillor and has since1 May 2015 become full time in accordance with Municipal Notice No. 41 dated 27 March 2015. 23. Depreciation, amortisation and impairment Property, plant and equipment 48 631 872 48 447 313 48 631 872 48 447 313 Intangible assets 249 452 524 026 249 452 524 026 48 881 324 48 971 339 48 881 324 48 971 339 24. Finance costs Interest paid - long term liabilities 7 573 950 7 988 224 12 671 936 13 637 099 25. Repairs and maintenance Vehicles, buildings and other 1 456 111 1 460 935 1 456 111 1 460 935 Water and sanitation infrastructure 75 364 076 50 647 483 75 364 076 50 647 483 76 820 187 52 108 418 76 820 187 52 108 418 26. Bulk purchases Electricity for operations 19 562 540 19 409 608 19 562 540 19 409 608 Water 19 661 216 13 060 895 19 661 216 13 060 895 39 223 756 32 470 503 39 223 756 32 470 503 27. Contracted services Service support agent, information technology services, enviromental health and administration services 87 960 565 80 975 345 87 960 565 80 975 345 Internal audit 1 991 962 1 430 244 1 991 962 1 430 244 Specialist services 411 641 109 448 411 641 109 448 90 364 168 82 515 037 90 364 168 82 515 037 28. Grants and subsidies paid KZ 282 umhlathuze - 4 856 400-4 856 400 KZ 283 Ntambanana 7 181 000 6 851 000 7 181 000 6 851 000 KZ 284 Umlalazi - 482 719-482 719 KZ 281 Umfolozi - 43 000-43 000 7 181 000 12 233 119 7 181 000 12 233 119 Other transactions with Municipalities are included in the general expenses note 29. 54 165
uthungulu District 2014/2015 22. Remuneration of councillors Mayor 809 232 764 609 809 232 764 609 Deputy Mayor 651 560 615 861 651 560 615 861 Speaker 436 926 489 375 436 926 489 375 Chief Whip 425 272 385 798 425 272 385 798 Executive Committee 3 108 875 2 666 905 3 108 875 2 666 905 Councillors 2 817 426 3 167 055 2 817 426 3 167 055 Councillors' pension contribution 720 726 724 190 720 726 724 190 MPAC Chair 425 459-425 459-9 395 476 8 813 793 9 395 476 8 813 793 In-kind benefits The Mayor, Deputy Mayor, Speaker, Chief Whip and Executive Committee Members are full-time. Each is provided with an office and secretarial support at the cost of the Council which is included with other expenditure in the statement of financial performance. The Mayor, Deputy Mayor and Speaker have the use of a Council owned vehicle together with a driver for official duties and furthermore security is provided for some Exco members based on security assessments. The MPAC Chair was previously a part time councillor and has since1 May 2015 become full time in accordance with Municipal Notice No. 41 dated 27 March 2015. 23. Depreciation, amortisation and impairment Property, plant and equipment 48 631 872 48 447 313 48 631 872 48 447 313 Intangible assets 249 452 524 026 249 452 524 026 48 881 324 48 971 339 48 881 324 48 971 339 24. Finance costs Interest paid - long term liabilities 7 573 950 7 988 224 12 671 936 13 637 099 25. Repairs and maintenance Vehicles, buildings and other 1 456 111 1 460 935 1 456 111 1 460 935 Water and sanitation infrastructure 75 364 076 50 647 483 75 364 076 50 647 483 76 820 187 52 108 418 76 820 187 52 108 418 26. Bulk purchases Electricity for operations 19 562 540 19 409 608 19 562 540 19 409 608 Water 19 661 216 13 060 895 19 661 216 13 060 895 39 223 756 32 470 503 39 223 756 32 470 503 27. Contracted services Service support agent, information technology services, enviromental health and administration services 87 960 565 80 975 345 87 960 565 80 975 345 Internal audit 1 991 962 1 430 244 1 991 962 1 430 244 Specialist services 411 641 109 448 411 641 109 448 90 364 168 82 515 037 90 364 168 82 515 037 28. Grants and subsidies paid KZ 282 umhlathuze - 4 856 400-4 856 400 KZ 283 Ntambanana 7 181 000 6 851 000 7 181 000 6 851 000 KZ 284 Umlalazi - 482 719-482 719 KZ 281 Umfolozi - 43 000-43 000 7 181 000 12 233 119 7 181 000 12 233 119 Other transactions with Municipalities are included in the general expenses note 29. 54 166
uthungulu District 2014/2015 29. General expenses Advertisements 579 002 699 734 579 002 699 734 Assessment rates and municipal charges 1 119 643 778 427 1 119 643 778 427 Audit committee fees 113 230 112 606 113 230 112 606 Bank charges 213 120 202 894 213 120 202 894 Bursaries 664 356 263 820 664 356 263 820 Chemicals and cleaning materials 2 445 543 2 633 851 2 445 543 2 633 851 Delegations 1 017 002 572 312 1 017 002 572 312 External audit fees 1 974 585 2 148 541 1 974 585 2 148 541 Fuel and oil 4 055 108 3 758 736 4 055 108 3 758 736 IDP operational externally funded projects 76 461 530 62 098 994 76 461 530 62 098 994 IDP operational internal funded projects 91 536 258 53 798 529 91 536 258 53 798 529 Indigent burials 103 196 101 172 103 196 101 172 Insurance 994 489 1 304 648 994 489 1 304 648 Landfill site reclamation 2 189 760 4 805 497 2 189 760 4 805 497 Legal fees 812 518 283 098 812 518 283 098 Levies and membership fees 1 619 574 1 262 303 1 619 574 1 262 303 Licenses 1 453 433 1 703 383 1 453 433 1 703 383 Personal protective equipment 489 405 232 004 489 405 232 004 Printing and postage 1 452 101 1 219 175 1 452 101 1 219 175 Publicity 1 063 057 1 134 157 1 063 057 1 134 157 Refreshments 454 587 475 771 454 587 475 771 Rent - Plant and vehicles 5 578 574 5 004 228 5 578 574 5 004 228 Rent office 53 958 63 345 53 958 63 345 Skills development levy 1 118 212 946 139 1 118 212 946 139 Small tools 23 297 42 954 23 297 42 954 Staff medical examinations 142 171 213 850 142 171 213 850 Stores and material 98 317 73 358 98 317 73 358 Subsistence and travelling 2 484 323 1 260 218 2 484 323 1 260 218 Telephone 1 801 191 1 770 861 1 801 191 1 770 861 Training costs 2 563 384 1 646 864 2 563 384 1 646 864 Workmen's compensation 629 082 648 936 629 082 648 936 205 304 006 151 260 405 205 304 006 151 260 405 30. Cash generated from operations Surplus before outside partners interest adjustment 171 160 642 217 016 300 171 131 456 216 984 723 Adjustments for: Depreciation and amortisation 48 881 324 48 971 339 48 881 324 48 971 339 (Surplus)/Loss on sale of property, plant and equipment 1 405 553 192 530 1 405 553 192 530 Fair value adjustments - (59 806) - (59 806) Debt impairment 10 259 804 4 329 873 10 259 804 4 329 873 Movements in defined benefit obligations 4 229 000 1 404 000 4 229 000 1 404 000 Movement in provisions (803 642) (9 227 691) (803 642) (9 227 691) Distribution by partnership (29 185) (31 575) Changes in working capital: Inventories (2 063 007) 717 125 (2 063 007) 717 125 Accounts receivable from non exchange transactions (49 468 205) (5 910 857) (49 468 205) (5 910 857) Accounts receivable from exchange transactions-consumer debtors (10 175 140) (8 245 260) (10 175 140) (8 245 260) Payables from exchange transactions 22 383 034 27 895 771 22 383 034 27 895 771 Accounts receivable from exchange transactions - Vat (37 871 239) (2 496 826) (37 871 239) (2 496 826) Unspent conditional grants and receipts (13 118 902) 19 294 194 (13 118 902) 19 294 194 Consumer deposits 37 054 547 538 37 054 547 538 Other non-cash items: Accruals (30 364 352) (15 767 003) (30 364 352) (15 767 003) 114 462 739 278 629 652 114 462 738 278 629 650 31. Commitments Authorised capital expenditure Approved and contracted for - Infrastructure 279 927 929 280 396 423 279 927 929 280 396 423 This expenditure will be financed from: - Government grants 269 656 469 271 101 521 269 656 469 271 101 521 - Own Resources 10 271 460 9 294 902 10 271 460 9 294 902 279 927 929 280 396 423 279 927 929 280 396 423 The outstanding commitments relate to capital projects and other assets that have been committed by order, by the Bid Adjudication Committee and Executive Committee prior to 30 June 2015. 55 167
uthungulu District 2014/2015 32. Operating leases - as lessee (expense) Minimum lease payments due - within one year 4 830 040 3 681 092 4 830 040 3 681 092 - in second to fifth year inclusive 1 036 783 4 201 114 1 036 783 4 201 114 5 866 823 7 882 206 5 866 823 7 882 206 Operating lease payments represent payments for the leasing of vehicles by the group and municipality. Lease contracts are entered into for a three year period and the lease payments are fixed for the lease period with no escalation. An amount of R 4 907 951 has been recognised in the statement of financial performance. 33. Deviation from supply chain management regulations Paragraph 12(1)(d)(i) of Government gazette No. 27636 issued on 30 May 2005 states that a supply chain management policy must provide for the procurement of goods and services by way of a competitive bidding process. Paragraph 36 of the same gazette states that the accounting officer may dispense with the official procurement process in certain circumstances, provided that he records the reasons for any deviations and reports the said deviations to the next meeting of Council and includes a note to the consolidated annual financial statements. All deviations are reported to Council on a quarterly basis with a detailed schedule and reasons thereto. The deviations greater than R 200 000 are listed individually below for the year ended 30 June 2015. Project Description Monthly maintenance for DIMS system 470 701 470 701 Management Advanced Programme 258 600 258 600 Purchase of BIOGAS digesters 280 326 280 326 IT security and IT governance consulting 630 000 630 000 Extension of the provision of plant hire services 1 152 059 1 152 059 Installation of IT system for fresh produce market 491 728 491 728 Extension of the provision of plant hire services 866 433 866 433 Training for councillors at Wits Business School 466 830 466 830 Water tanker services 288 000 288 000 Delivery discharge test of borehole services 407 721 407 721 Extension of the provision of plant hire services 769 833 769 833 Extension of the provision of plant hire services 866 443 866 443 Extension of the provision of plant hire services 485 612 485 612 SABC broadcasting services 285 000 285 000 SALGA games sports ware 279 387 279 387 SALGA games accommodation 280 000 280 000 Shared services 799 680 799 680 Extension of the provision of plant hire services 521 122 521 122 Extension of the provision of plant hire services 837 355 837 355 SALGA games catering services 307 458 307 458 Last dance music festival 250 000 250 000 Extension of the provision of plant hire services 1 547 629 1 547 629 Vehicle purchase 441 294 441 294 Uthungulu house phase 2 alterations 738 692 738 692 Extension of the provision of plant hire services 247 605 247 605 Emergency interventions Mtunzini waste water 5 746 344 5 746 344 Project implementation of fresh produce market 673 074 673 074 Provision of architectural services 285 300 285 300 Extension of the provision of plant hire services 1 050 513 1 050 513 Hire of environmental vehicles 209 868 209 868 Water tanker services - drought 1 307 042 1 307 042 SALGA games accommodation 325 800 325 800 Provision of Arcgis basic training 242 937 242 937 Extension of the provision of plant hire services 837 355 837 355 Rental of fresh produce market premises 324 900 324 900 Water tanker services - drought relief 2 228 369 2 228 369 Cost for purchase of water - drought relief 3 558 601 3 558 601 Drought relief contract work 1 794 411 1 794 411 Appointment of PMU support 694 080 694 080 Roadshows entertainment 208 000 208 000 56 168